Determinants and Perspectives for Economic Growth in the Coming Years
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Results of international comparisons that evaluate determinants of economic growth are presented at first. It is noted that Polish economy is located in each sphere at one of the lowest positions among referred to countries. That indicates the need for economic reforms - the most important relate to business conditions and to public finance (high level of deficit and public debt). However the results of comparative studies contrast with the present performance of the Polish economy. It is argued in the paper that the high rate of growth will probably last two-three years and then a cyclical downturn might occur in Europe and in Poland. The economy should be prepared to cope with such a situation when the growth rate falls lower than to ca 4% p.a., to some 1-2%, as the result of economic disequilibria (budget deficit well above 3% of GDP). Finally the economy may slip into long lasting recession. Further and more far reaching economic reforms, including privatization (also of the so called social services), are needed if that is not to happen. In the years of high growth the budget deficit should be reduced not to 3% of GDP but to 1% or even zero in order to be prepared for long term spending pressures. To achieve that in practice priority in economic policy should be given to the reduction of budget expenditures, even at the cost of tax reform which is advisable per se. Are the chances of implementation of deep economic reforms in the years of high growth already definitely lost? This is the question put forward at the end of the paper.
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